Australia returns trump emerging Asia

23rd Sep 13

In this article, Clare Burrows from Private Equity International shares key findings presented at AVCAL's 20th annual alpha conference last week, in particular that Australian private equity firms have generated better long term returns for LPs than emerging Asian managers. Data presented at the conference showed that over a 15-year period, Australian private equity has returned a rate of 14.3 percent to investors net of fees, while emerging Asia has only returned 8.8 percent. Over a three-year period the two returned 11.9 percent and 11.8 percent respectively.

Managing Director and Global Head of Macquarie Investment Management Group, Michael Lukin said at the conference that “What [the data] doesn’t show is also [the volume of] exits. A lot of the returns that have been generated out of places like China and India are actually unrealised.”

Industry sources say that Australia’s exit environment is good at the moment, with a buoyant IPO market and trade buyers coming in from abroad, however some say that investing in places like China is still attractive. A domestic LP who attended the alpha conference said: “I think there is value provided you can find the right group. That group has to have certain connections at a political level, but they’ve also got to have genuine investment and operating expertise. But then you also have to stop and [mix] that country exposure to a more regional strategy as well.”